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Competitiveness of the cassava starch industry in Brazil and in Thailand

Most recent data from FAO (Food and Agriculture Organization) indicate that, in 2017, the world cassava production totaled 280 million tons. Although Africa is the main producer, the southeast of Asia is a great producer of starch, chips, pellets and biofuel (ethanol).

 

Cassava became an agroindustrial raw material in Asia in the 18th century and has gained importance over the last 30 years, especially in Thailand, major world starch exporter. More recently, production advanced in Indonesia, Vietnam, Cambodia, Laos and China.

 

South America is a major producer of cassava, and Brazil is in the spot. However, there are major differences between the starch industry in Asia and in South America, related to investments, costs and markets supplied.

 

The Thai industry of cassava starch is composed by 73 companies (associated to the Thai Tapioca Starch Association), able to produce from 3 to 3.5 million tons per year. There were important advances in terms of technology, especially by investments in research from the private initiative and endorsed by local associations. The evolution was observed for genetic improvement, agricultural yield, investments in industrial technologies, added-value products, new uses for the starch and changes in the agricultural policy. Moreover, other aspects that favor the production of Thai starch are low production costs, mainly with workforce, and logistics – in 2017, China bought more than 90% of the starch produced by Thailand.

 

As for Brazil, data from Cepea and Abam (Brazilian Association of Cassava Starch Producers) indicate that, in 2017, there were 72 starch manufacturers in Brazil, able to process 21.5 thousand tons of roots per day. Considering that the industry works 300 days per year, with an average starch yield of 27%, the potential to produce is 1.74 million tons – last year, production totaled 410.9 thousand tons. This means that idleness is higher than 70% of the capacity.

 

Clearly, there are many other aspects that differentiate the agriculture in Thailand and in Brazil. While cassava is the third major product in Thailand, in Brazil, there is a fierce competition for area with other activities, mainly grains. Moreover, production costs in Brazil are higher compared to those in Thailand.

 

There are many bottlenecks to overcome, but it is possible to generate exportable surplus, optimizing the capability available. With the participation below 1% in the world starch market, there would certainly be potential for the Brazilian product to be inserted in European Union and America markets, especially due to the increasing demand of non-transgenic and gluten free products.

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